During the second week of June, business activity has failed to recover in most regions globally, although countries have seen different price movements. In the EU, local and import prices weakened again, reflecting the slowdown of demand, particularly due to the approaching summer holiday season. In Turkey, where mills were trying to raise offers, the aggressive sales policy of the Russians and of some of the local re-rollers has affected the mood and prices have rolled back. In Asia, on the contrary, certain price rises have been seen this week, mainly due to the firmer market in China, though actual business activity has remained slow.
Russia maintained its activity in terms of HRC exports this week and Turkey remained the primary target market. In addition to around 75,000 mt sold earlier by NLMK, Russia’s Severstal traded 30,000-35,000 mt at around $740-745/mt CFR. Market players report that trade has been difficult, partly due to risks, but also because buyers have been hesitant to book in the falling market. Some talks were heard between Russia and Asia for HRC, though not much trade was seen. Severstal finalized 30,000 mt with Indonesia at $670/mt CFR. Chinese buyers received $675/mt CFR from Russia’s MMK, which is certainly not workable. Vietnam is reportedly not buying, fearing secondary sanctions if the local mills use Russian origin HRC in their rolling operations, with further downstream product sales to the US and the EU. Overall, despite some trade, it seems it is getting harder for Russia to trade its materials abroad for many reasons, such as financial issues, insurance, organization of shipments, etc. For now, only NLMK can act relatively freely, not yet being under direct sanctions. However, the mill is still forced to sell its products at a sizable discount if compared to non-Russian material.
Russia’s aggressive HRC sales have impacted the Turkish market in a negative way and the upward mood seen among the local mills last week has come to a halt lately. Mills have returned to $800-840/mt ex-works in official offers, while by the end of the week sources started reporting $770-780/mt ex-works levels also being available. Although there were sizable HRC sales by Turkish mills in previous weeks to the export and local markets, producers still seem to have availability for July. In addition, falling scrap prices also put pressure on the upward mood. Similar to HRC, the optimism in the coated steel segment has also cooled down a bit this week. With another move by Tezcan, announcing a summer sale again at $899/mt ex-warehouse for CRC and HDG, some of the re-rollers found themselves not in a position to increase prices. Still, June and some July volumes seem to be sold for now for coated and CRC, but exports remain a problem specifically for HDG, given the recently imposed AD tax in the EU.
In the EU, domestic HRC prices have continued to decrease, affected by still low end-user demand and expectations of further price declines in the coming period. This week, workable HRC prices in the local market in the EU have been assessed at €890-970/mt ex-works, against levels of €920-1,000/mt ex-works reported last week. In this situation, mills are considering cutting their outputs, and a few of them may have already done so. At the same time, the mills still have some hope that steel prices will recover without production cuts as most of them are concerned that stoppages of blast furnaces would be too expensive. In the import segment, the general offer levels are at €820-860/mt CFR, down by €10/mt week on week, with the lower end of the range corresponding to import offers in the Italian market and with the higher end of range in Spain. New import HRC offers from Asian customers have kept decreasing this week, while other suppliers, like those from Turkey, India and Egypt have mostly maintained their prices unchanged over the past week.
In Vietnam, import HRC prices have increased again amid further gains in Chinese prices. In particular, Chinese traders, who offered SS400 HRC at $745-750/mt CFR last week, have increased their offers to $760-765/mt CFR, with several deals reported at $758-760/mt CFR for August shipment. Meanwhile, Vietnamese buyers have reported offers for ex-China SEA1006 HRC at $765-780/mt CFR, up $5-10/mt from last week. Thus, the reference price for import SAE1006 has moved to $765-780/mt CFR, compared to $760-770/mt CFR last week, considering the recent offers coming from China. At the same time, apart from China, other suppliers like those from Russia and India have been offering their materials in Vietnam at lower levels but have failed to attract buyers due to the payment problems in the case of Russia and the lower-than-usual quality of the HRC in the case of India. Both offers for ex-Russia and ex-India HRC have been reported at around $745/mt CFR Vietnam.
Ex-China HRC prices have posted another increase this week. Although the increase in domestic quotes was not significant, market players are more optimistic towards the future market prospects following the resumption of production activities in Shanghai and the surrounding regions. Thus, export offers for boron-added SS400 HRC given by major Chinese mills are at $765-780/mt FOB for August shipment, with a midpoint at $772.5/mt FOB, posting a $12.5/mt increase on average compared to last week. Meanwhile, the tradable level for ex-China SS400 HRC has been settled at $735-770/mt FOB, up by $5-10/mt week on week. Several deals for ex-China SS400 HRC have been reported at $758-760/mt CFR Vietnam, up by $10-13/mt over the past week. At the same time, this week buyers in Pakistan have been refusing ex-China offers at $790/mt CFR due to problems with opening LCs. Meanwhile, domestic HRC prices in China have been fluctuating all this week, coming to RMB 4,850-4,970/mt ($728-746/mt) ex-warehouse on June 10, with the average price level RMB 10/mt ($1.5/mt) lower as compared to June 3, according to SteelOrbis’ data.